Opinion
NO. 2011-CA-001040-MR
07-20-2012
R.J. RECORD APPELLANT v. ALEX MONTGOMERY, INC. APPELLEE
BRIEF FOR APPELLANT: Danny Butler Greensburg, Kentucky BRIEF FOR APPELLEE: David A. Nunery Steven C. Call Campbellsville, Kentucky
NOT TO BE PUBLISHED
APPEAL FROM TAYLOR CIRCUIT COURT
HONORABLE DAN KELLY, JUDGE
ACTION NO. 09-CI-00311
OPINION
AFFIRMING
BEFORE: COMBS AND THOMPSON, JUDGES; LAMBERT, SENIOR JUDGE. COMBS, JUDGE: R.J. Record appeals from the judgment of the Taylor Circuit Court in favor of Alex Montgomery, Inc., an automobile dealership which sought specific performance to compel transfer of title to a vehicle. After careful review of the record and pertinent principles of law and equity, we affirm.
Senior Judge Joseph E. Lambert sitting as Special Judge by assignment of the Chief Justice pursuant to Section 110(5)(b) of the Kentucky Constitution and KRS 21.580.
The appellant, R.J. Record (R.J.), gave his grandson, Robert Record (Robert), a 2005 Chevrolet Silverado pickup truck but retained the title. According to R.J., he intended to transfer title to Robert when he graduated from college. This was the second vehicle purchased by R.J. for the exclusive use and benefit of Robert. The first vehicle was a Pontiac Firebird purchased for Robert while he was in high school. The Firebird was traded for the Silverado pickup truck.
On April 27, 2009, while he was still attending college, Robert spoke with Rick Herron, a sales representative of Alex Montgomery, Inc., about trading the pickup truck for a 2008 Chrysler sedan. During the course of their negotiations, Herron spoke by telephone with R.J. Don Shuffett, the dealership's sales manager, was present when Herron placed the telephone call. Herron wanted to determine whether R.J. would help finance the cost of the sedan that Robert intended to purchase. Both Herron and Shuffett testified that R.J. indicated unequivocally that he had purchased the pickup truck for Robert, that the truck belonged to Robert, and that Robert was free to trade the truck for the sedan if he so chose. However, R.J. indicated equally unequivocally that he was not willing to help finance the cost of the sedan.
Crucial to this case is whether disclosure was ever made about the location and possession of the title to the truck. R.J. testified that he advised Herron during their telephone conversation that he (R.J.) retained title to the pickup truck. Herron acknowledged that R.J. had indicated during the conversation that he wanted more information about the proposed deal before the parties went forward. However, Herron denied that R.J. ever informed him that he retained the certificate of title.
Two days later, on April, 29, 2009, R.J. and Alex Montgomery, owner of the dealership, spoke by telephone. R.J. again indicated that he would not help with the cost of the sedan. Nevertheless, Robert signed an offer-to-purchase agreement that represented the Silverado pickup truck as his trade-in vehicle. After working with Rebecca Moore, the business manager for the dealership, Robert also signed a retail installment contract and a security agreement. Finally, Robert signed a contract indicating that he would deliver the certificate of title to the dealership within five (5) days of the date of sale. The dealership delivered the sedan to Robert for a purchase price that included a credit of $13,500 for the trade-in allowance on the pickup truck.
After the sale was consummated, R.J. contacted the dealership and expressed his displeasure that Robert had been permitted to trade in the pickup truck since it had never been transferred to Robert. Herron indicated that he was surprised to learn at that time that R.J. had retained title to the pickup truck. R.J. then refused to transfer title of the pickup truck to the automobile dealership.
On July 28, 2009, Alex Montgomery, Inc., filed a petition for declaratory judgment. Default judgment was entered against Robert on July 20, 2010. Following a bench trial conducted in April 2011, the trial court concluded that Robert had authority to trade the pickup truck, that R.J. held title to the pickup truck in a fiduciary capacity for the benefit of Robert, and that R.J. was bound by principles of equitable estoppel to sign and to deliver title to the pickup truck to the dealership. R.J. was ordered to execute and deliver the certificate of title immediately. This appeal followed.
On appeal, R.J. argues that Robert was not acting as his agent in the transaction. He also argues that by failing to verify the status of the title to the pickup truck, the automobile dealership neglected to act with due diligence to protect its own interests. Therefore, he contends that the judgment should be reversed. We disagree.
The scope of our review of cases tried upon the facts without a jury is governed by our rules of civil procedure. Findings of fact shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge the credibility of the witnesses. Kentucky Rules of Civil Procedure (CR) 52.01. However, issues of law are reviewed de novo. Caesars Riverboat Casino, LLC v. Beach, 336 S.W.3d 51 (Ky. 2011).
R.J. incorrectly contends that principles of agency are involved. And the trial court did not base its judgment upon principles of agency, concluding instead that R.J. was equitably estopped by his own actions from asserting that Robert lacked authority to trade the pickup truck for the sedan.
In Bruestle v. S & M Motors, Inc., 914 S.W.2d 353, 355 (Ky. App. 1996), we noted that the "[t]he doctrine of equitable estoppel is applied to transactions in which it would be unconscionable to permit a person to maintain a position which is inconsistent with one in which he has acquiesced." Citing Hicks v. Combs, 311 Ky. 149, 223 S.W.2d 379, 381 (1949). Equitable estoppel is permitted when the party estopped is aware of material facts that are unknown to the other party and then engages in conduct -- such as acts, language, or silence -amounting to a misrepresentation or concealment of the material facts. The conduct is performed with the intention or expectation that the other party will rely upon it, and the other party does so rely to his detriment. See Howard v. Motorists Mutual Insurance Co., 955 S.W.2d 525 (Ky.1997); Gray v. Jackson Purchase Production Credit Association, 691 S.W.2d 904 (Ky.App.1985).
In order to establish an equitable estoppel against R.J., Alex Montgomery, Inc., had to show three elements relevant to its own position: (1) lack of knowledge; (2) reliance, in good faith, based upon something R.J. did or did not do or represent; and (3) resulting action or inaction on the part of the dealership that somehow changed its position or status to its detriment. It also had to show that R.J. engaged in conduct: (1) which amounted to a false representation or concealment of material facts; (2) with the intention, or at least the expectation, that such conduct shall be acted upon by, or influence, the other party; and (3) with knowledge of the true facts.
Based upon the evidence presented, the trial court found that R.J. intentionally made statements that induced representatives of the auto dealership to conclude that Robert was the owner of the pickup truck and that he had unlimited authority to do with it whatever he chose. The trial court also found that R.J. had extensive experience in automobile sales and that he was well aware (indeed, intended) that his representations would be relied upon to the detriment of Alex Montgomery, Inc. Finally, the court found that the representatives of the auto dealership did not know that R.J. held title to the pickup truck at the time that the transaction was consummated; that they relied upon his statements indicating that the truck belonged to his grandson, Robert; and that they gave Robert a significant trade-in allowance based upon the representation. There was substantial evidence supporting these findings of fact. From these findings, the trial court properly concluded that all of the elements of equitable estoppel were met in this case.
Equitable estoppel is essentially a remedy for fraud, and we are not aware of any reason that general principles of estoppel may not be invoked under the specific circumstances presented here. Our certificate-of-title law was enacted "to inhibit registration and transfer of stolen motor vehicles"; "to improve the capability of detecting and recovering such vehicles"; "to ensure development of a common vehicle information database to improve efficiency in auditing motor vehicle usage tax, license fee collections, and in collecting personal property tax" and "to provide improved security interest protection to potential creditors...." Kentucky Revised Statute(s)(KRS) 186A.010(1). While the provisions of KRS 186.215(1) outline specific and mandatory procedures for the transfer of vehicle titles, the act contains no express provision to exclude the operation of estoppel against a person holding a valid certificate of title. Moreover, the express purpose of the act is to combat theft and fraud. Therefore, we conclude that its provisions should not be invoked to preclude the operation of the equitable principles of estoppel to protect an entity from one whose conduct has perpetuated a fraud.
The trial court did not err by concluding that principles of equitable estoppel were implicated in this case. It correctly held that under the circumstances of this case, R.J. was estopped to deny that Robert had a right to trade in the pick-up truck. It properly directed R.J. to deliver the certificate of title to Alex Montgomery, Inc.
We affirm the judgment of the Taylor Circuit Court.
ALL CONCUR. BRIEF FOR APPELLANT: Danny Butler
Greensburg, Kentucky
BRIEF FOR APPELLEE: David A. Nunery
Steven C. Call
Campbellsville, Kentucky